FII holding in top 500 companies highest since Mar 2010

NEW DELHI: Foreign Institutional Investors (FIIs) holding in top Indian companies has reached their highest level since March 2010 on account of strong domestic consumption and sound financial system.

FIIs' aggregate holding in BSE 500 companies has gone up from 11.3 per cent in March 2010 to 12.6 per cent in March 2012, according to a report prepared by ICICI Direct.

Listed companies update their quarterly shareholding pattern with stock exchanges with a lag of one month or more.

FII holding climbed by 2.3 per cent in December quarter of 2011 to 12.6 per cent in January-March quarter of 2012 with the BSE 500 index rising by 17 per cent to 6,759 level in March 2012 from 5,779 levels in December 2011.

"The optimism displayed by FIIs in the Indian corporate growth story arises from the fact that the Indian economy remained relatively insulated from the global economic meltdown mostly on account of the strong domestic consumption, thrust on infrastructure development and a strong banking system," ICICI Direct Research Head Pankaj Pandey said.

The resilience of the Indian economy reaffirmed the faith of FII investors who have increased their holding in Indian companies.

After pulling out Rs 53,052 crore in the calendar year 2008 during the global economic meltdown, FIIs have invested Rs 85,368 crore in 2009 and Rs 1,34,294 crore in 2010, he added.

However, in 2011, FII investments in equity were volatile with a cumulative net outflow of Rs 3,358 crore. In the first three months of 2012 has seen a deluge of investment with FIIs pumping funds to the tune of Rs 44,500 crore.

After March, a combination of poor global sentiment and local macroeconomic factors have impacted the Indian stock markets and FII's appetite for stocks.

However, in terms of sectoral exposure, banking has maintained its position as the top allocated sector during the last nine quarters, while IT sector has been most stable in terms of allocation.

The real estate sector, however, after the initial euphoria, has seen lower allocation over the last nine quarters.

Individually, banking space has been able to maintain its top allocation with a 10.9 per cent stake in March quarter, although the quantum has come down from the high of 13.2 per cent in December 2008 after the global meltdown in the second half of that years.

FII's increased their ownership in automobile sector from 4 per cent in March 2010 to 6 per cent in March 2012 and in the FMCG sector too their holding went up from 3.6 per cent to 4.7 per cent in the same period.